"In two to three years, you're not going to go to a commercialreal estate closing and see someone produce a Phase I environmentalreport, just as today you're not going to see someone produce atitle search or an abstract," says Perry, whose firm is aninsurance underwriter brokerage working with lenders, owners,buyers, securitizers, investors and REITs.
Perry says the upfront premium for environmental insurance canbe 30% more than the cost of a Phase I study. Premiums can cost$1,200 for $1 million in insurance and up to $3,000 for $5 millionto $10 million in coverage.
Lauren Cerda, director of structured finance of commercialmortgages for Fitch, says rating agencies such as hers have beenconcerned about substituting insurance for Phase I studies. Ofparticular concern is what happens if the insurer fails to pay aclaim.
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